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Welfare Analysis in Games with substitutabilities

Author

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  • Yann Rébillé

    (LEMNA - Laboratoire d'économie et de management de Nantes Atlantique - IEMN-IAE Nantes - Institut d'Économie et de Management de Nantes - Institut d'Administration des Entreprises - Nantes - UN - Université de Nantes)

  • Lionel Richefort

    (LEMNA - Laboratoire d'économie et de management de Nantes Atlantique - IEMN-IAE Nantes - Institut d'Économie et de Management de Nantes - Institut d'Administration des Entreprises - Nantes - UN - Université de Nantes)

Abstract

This paper investigates the social optimum in network games of strategic substitutes and identifies how network structure shapes optimal policies. First, we show that the socially optimal profile is ob-tained through a combination of two opposite network effects, generated by the incoming and the outgoing weighted Bonacich centrality measures. Next, three different policies that restore the social optimum are derived, and the implications of the predecessor(s)-successor(s) relationship between the agents on each policy instrument are explored. Then, the link between optimal taxes and the density of the network is established.

Suggested Citation

  • Yann Rébillé & Lionel Richefort, 2012. "Welfare Analysis in Games with substitutabilities," Working Papers hal-00732950, HAL.
    • Handle: RePEc:hal:wpaper:hal-00732950
    Note: View the original document on HAL open archive server: https://hal.science/hal-00732950
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    Cited by:

    1. Yann Rébillé & Lionel Richefort, 2015. "Influence and Social Tragedy in Networks," Revue d'économie politique, Dalloz, vol. 125(6), pages 811-833.
    2. Allouch, Nizar, 2017. "The cost of segregation in (social) networks," Games and Economic Behavior, Elsevier, vol. 106(C), pages 329-342.
    3. Allouch, Nizar, 2017. "The cost of segregation in (social) networks," Games and Economic Behavior, Elsevier, vol. 106(C), pages 329-342.

    More about this item

    Keywords

    spectral radius; network game; social optimum; Bonacich centrality; opti- mal policy; spectral radius.;
    All these keywords.

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